From Optimism to Panic: time to buy?
On-chain and technical analysis of BTC & ETH
Dear Tokeners,
After a great weekend, here we are again, we were so excited with the great reports we are bringing to you that end up sending you a draft of the newsletter. We can’t wait to share with you the analysis that our mate Félix Fuertes is bringing us today, 👉 don’t miss it!
Read till the end, it is so interesting. And when you think you are done, keep reading, because the deep insights of Giancarlo Prisco regarding technical analysis of the pairs ETHUSD, ETHBTC, and SOLUSD will amaze you… and a bonus, a surprise analysis at the end 😉.
Yep, we start the week with a lot of energy… so much that our ears are becoming green like Yoda’s 😲 …be the force be with you…
Oh, that’s just Monday, imagine the rest of the week❗
And if you like it, you know, tell it to your brother, your father, your friend and even to your neighbor 👇👇
On-chain analysis of BTC & ETHER
from Optimism to Panic: time to buy?
Today we will focus our analysis on the Bitcoin Blockchain, a cryptoactive that has marked the trend of the last seven days of the entire market, downwards...
Remind you that this report offers valuable information but perhaps there may be concepts that are difficult to understand without prior training, so we encourage you to sign up for a Crypto Investment course to become a sophisticated investor in the world of cryptocurrencies.
For the situation that we are going to analyze, the first thing that comes to mind, those of us who are lovers of understanding the fundamentals of the assets in which we invest, is that famous phrase of one of the best investors in history: Warren Buffet.
At first glance, and with a simple basis of Technical Analysis, we observe that the price structure of Bitcoin remains on its long-term bullish guideline (this guideline takes minimums older than 12 months and we already know that the times in the crypto market are shorter than in other markets).
If we study the liquidity zones and the fractality of the price movement at the breakout of the guideline in the medium term, it is curious to see that the “Flash Crash” of Bitcoin has reached these zones perfectly, also coinciding with the guideline and a Very confident support zone (too many confidence factors for traders and investors in the market come together, which leads to rejection movements in that zone due to the magnitude of purchase orders that absorb the offer).
Generally, these types of movements are usually produced by excess leverage in derivative products on the asset in which you are speculating.
If we analyze the interest rate in Bitcoin Futures that was being paid by speculators in the last month, we observe how it has remained stable between 0.01% and 0.005%, now entering a negative field (that is, if we open a trade leveraged, they would pay us to keep it open). This incentive by Exchanges and Brokers is usually highly appreciated by short-term traders, who take advantage of the opportunity to open highly leveraged trades at zero cost, which indicates that in the coming days we could have a very volatile upward movement (making a Pullback in the guideline indicated with the red arrow in the previous chart) and then correcting again and retesting the long-term bullish guideline (as a result of the potential liquidations of speculators).
If we are going to see the interest paid by traders and investors for operations in open Futures, a flight from the market of the same is clearly seen, which mostly involves the collection of losses from long positions (as we can see in the second graph below) and a small portion of revenue collection by sellers. This leaves a gap (opportunity) for speculators in the market that will probably end up being covered in a very agile way in the coming days.
The next logical step to review is to analyze, in addition to speculators, if investors or HODLers have also decided to exit the market. We are going to analyze those wallets that could have a greater impact in the short / medium term on the price of Bitcoin: Wallets with more than 1 BTC and with more than 10 BTCs.
The two graphs below show that the number of wallets with these amounts has been growing during the fall, which raises the following question: Are the exchanges buying?
We are going to see the evolution of the balance in Bitcoin of all the Exchanges as a whole and to our surprise, their balance has been decreasing, which indicates that these institutions have not been the ones that have absorbed the sales of the last seven days.
One option that is posed to us as responsible for this is the recently approved ETF in the US on Bitcoin, from which it can be seen that a very approximate number of Bitcoins that have been leaving the Exchanges, have entered this Indexed Fund. A greater institutional interest can be concluded.
Within this movement, it is true that up to 9 trillion dollars have been made in profit, which could have anticipated the subsequent fall, but leads to think that all the possible profit has already been collected for the moment.
When we have peaks of collection of positions in losses, we usually have a market floor indicator. We would agree with the Technical Analysis previously commented.
Interestingly, we see that in the periods where traders / investors sell more losing than winning positions, these are usually the most optimal times to accumulate positions. We can wait a couple of weeks in lateralization before the price of Bitcoin takes a direction again.
The% of wallets in losses (unrealized), in technical words, Out of the Money (out of the money), has increased to 4% of the existing total…
… while the total number of In the Money wallets has dropped to 55% from 66%. The remaining 30% are considered to be in Breakeven.
In the previous report we observed that those HODLers with more than 3 months and less than 6 months of holding their Bitcoins in their wallets had been distributing during the entire rise.
Interestingly, we see that these remain in this last fall, but the number of holders with an age of less than 3 months has been increasing, a sign of sale risk if they begin to disappear and lose confidence about their purchase (especially, for the consideration of being buying at all-time highs).
We accompany the above by checking how many UTXOs have been spent. UTXOs represent those transactions (not leveraged) that have not been moved again. When we see spikes in UTXO spending it is usually because old Bitcoins are moving that could generate downward pressure on the price.
The latest movement of UTXOs could be associated with a last attempt to collect profits at highs ... 87% of registered UTXOs are still in profits.
Finally, we look at the activity of the miners, where the profit obtained by the miners by the activity is at the same levels of 2019. We need to see a lot of activity again (as can be seen in 2020) to understand that the price of Bitcoin could continue to rise.
Conclusions
After what we saw, we remain bullish in Bitcoin and in the market, with the knowledge that the next 2-3 weeks will be governed by intraday speculators and potential new members in the market that could consider a good moment to buy in Bitcoin.
At the moment, we have not seen movement of the HODLers in the long term, which can support the price (or send it lower), in case we see movement. We will be watching these players.
Crypto Technical Analysis
ETHBTC, ETH, SOL & special fast bubble analysis
In this weekly article, we will try to offer a clear vision of the key levels of the analyzed cryptocurrencies, according to a criterion of technical analysis and volumetric analysis, to offer concrete help to all those who work in the crypto world. This week we’ll analyze ETH/BTC, Ethereum, and Solana.
Analysis ETH/BTC
Ethereum's native token, Ether (ETH), sank along with other cryptocurrencies on December 4th. Still, its downward move didn't stop it from hitting a three-year high against Bitcoin (BTC), the world's leading cryptocurrency by market capitalization.
The ETH/BTC exchange rate jumped just over 11.50% to hit 0.0835 BTC for the first time since May 2018. The pair's price rally appeared in contrast to the 15% drop in the price of Ether. against the US dollar on Saturday, which came in the wake of a market-wide sell-off that saw Bitcoin sink as much as 21% intraday.
While Ether's losses were substantial, they were relatively milder compared to Bitcoin in USD terms, as the ETH / BTC pair rose to a three-year high. At the same time, some analysts believed that investors began treating the second-largest cryptocurrency as a safe haven against Bitcoin during Saturday's crash. Or more simply that the future of Ethereum, for its use, will see prices above 10,000 dollars.
From a technical point of view, Ethereum shows to continues its uptrend since the beginning of November without any signs of weakness. The ETH/BTC pair has accumulated in the zone between 0.057 and 0.066 since May 2021, clearly showing a cumulative phase. The level of 0.066 stopped any possibility of reversal, after the rise of April. We have seen another accumulation between 0.033 and 0.046 from January to April.
Taking into consideration the previous movements, the current objective is to add another 30 percent rise from the September highs, giving the possibility of seeing the 0.095-0.10 area in the coming weeks.
Monthly support at 0.066, below which we would have the possibility of seeing a stronger Bitcoin and aiming for the 0.046 area, where there is a possibility of a rebound. Until the 0.066 level remains untouched, Ether will be able to keep pushing and touch new all-time highs.
Analysis ETH/USD
Regarding last week, we have seen an attempt by Ethereum to break the $4,500 zone. The bullish signal has been denied and now the price travels dangerously to the $3,986 support, supported by a good volumetric pressure.
On a technical level, the price has seen a triple bottom in area $4,000. Losing this level could unleash a new massive sell-off. Area 3411-2761 is the volumetric support zone that sustains the current bullish movement, and which was formed between August and October. This zone may see a test a few times if the bearish force takes over. Annual support travels at $2434, the volumetric change we saw on May 19th.
We need a break of the $4,500 with strong pressure, to be able to attend an attack of the previous highs and look for area $5,000. The objective possible in extension, considering the previous movement, is to see area $6,323 and in the second step the $8,000.
Analysis SOL/USDT
Solana, the new benchmark blockchain for creating decentralized applications and challenging Ethereum, has started a bearish process since the beginning of November, failing to recover after the big rise in early autumn. The bullish attempt on Friday was denied from the general sell-off on Friday, leading the price to pierce an important volumetric support zone at area $192. This level, up to $146, forms a volumetric accumulation zone that we saw between September and October, and it is very important to maintain the upward trend on monthly basis. We have a chance to see a bullish reaction in that area. It is still fair to remember that only the creation of LOWS-HIGHS, accompanied by relevant volumes, will offer the possibility of a new uptrend.
If the 192-146 area will come down with verticality and pressure, it is very likely to see an acceleration in the price that could touch $120 and then approach $73, a level that in mid-August saw the beginning of a strong uptrend.
A 233 area recovery would be a strong bullish signal. The objective above that level, if accompanied by volumes, could be 20-30 percent, that is, 300-343 area.
It is fair to say that we are in a phase of low liquidity and therefore a change of general scenario is necessary to be able to see a new bullish phase. We will monitor areas 192-146 for purchases, although remember that volumes will be key in determining favorable entries.
Special guest: Fast Bubble Trading analysis on Bitcoin with Bookmap
Since last week we have raised the level of attention on cryptocurrencies after the movements of the stock markets. Volumetric activity and aggressive sales orders increased on the 3rd of December, which peaked Saturday.
The red and orange zones show the orders waiting to be executed. The darkest order indicates a big quantity of these orders. If the price manages to "eat" the 50k and the volumes accompany it, the prices can seek a return in the 59,200-63,200 area, passing by 54k.
Here there is a final obstacle, which if overcome, would open prices towards the 70,000-73,000 area. Between 46k and 45k there are orders waiting to be executed, as well as 42k. At 36k there are a few quantities of orders, after an almost unobstructed direction.
So, depending on the volumes, the speed, and the price reactions in the aforementioned areas, we will have an idea if this rise can be lasting or not. The order book shows us a huge number of trades up to 40k as well as the volume profile sees a little huge at 50k. Here is an example to understand positioning, liquidity, and possible levels where to buy and sell using a clear and effective tool, without a bet, but looking at the active and passive war of orders.
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